long-run

• potential economic growth refers to when the overall productive capacity of the economy increases
• actual economic growth refers to the yearly increase in the GDP of an economy
• the LRAS curve can be both classical and keynesian
• the classical LRAS curve assumes that the economy is always productively efficient and at full employment of resources (point y*)
• the keynesian LRAS curve is L shaped as it takes into account the unemployment of resources. the point y* is where it becomes productively efficient
• an output gap is the difference between actual output and potential output. it can be positive or negative